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May 17, 2010

NREGA: A Progress Report

Here is an excellent investigative piece full of very human stories on what I think is India's first and only economic safety net for its citizens. Launched in 2006 via the National Rural Employment Guarantee Act (NREGA), it promises 100 days of employment to one member of every rural household each year. However, things have not gone according to plan and Mehboob Jeelani tells us why.

Until 2004, India had 456 million people living below the international poverty line. Yet after four years of NREGA, the number of poor, which was expected to decline, has increased from 456 to 488 million. So what went wrong? ...

NREGA can appear as a success. After all, some records show the government provided employment to 44.1 million people in the last four years. The Ministry of Rural Development believes it has rescued thousands of farmers from debt through cash payments. The scheme has decreased urban migration by 30 percent, according to a survey by the Centre for Civil Society, and has increased the bargaining power of unskilled labourers, forcing private contractors to pay as much as 130 rupees per day to compete with NREGA. Through the construction of shovel-ready projects, NREGA has also vastly improved rural infrastructure. If the 2009 election results are any indication, wrote Mainstream weekly, NREGA and the money it injected into rural India ensured the re-election of the Congress. Thus, Manmohan Singh became the first prime minister to return to power after completing a full five-year term since Jawaharlal Nehru.

But NREGA hasn’t been an unqualified success. Today, the same welfare economists and grassroots activists who championed NREGA openly criticise it. They contend the government is killing a good scheme. Dreze and Roy think the government, instead of ensuring NREGA’s proper implementation, is watering down the social welfare elements by converging it with other government programmes. Several studies, including governmental ones, acknowledge widespread corruption in NREGA—fabricating vouchers is just one method of diverting funds. Caste-based discrimination is widespread. There is also a lack of political coordination between the Centre and state and local bodies. Most importantly, the promise of 100 days of guaranteed employment hasn’t been fulfilled. This leads one to wonder, four years on, what’s gone wrong with India’s Keynesian scheme?

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Here is another good and related article in the Frontline, Wages of Delay (via Raj).

WHEN the National Rural Employment Guarantee Act (NREGA) was enacted in 2005, it was celebrated as a “people’s Act”. It was an Act that focussed on labourers’ rights – to employment, minimum wages and timely payments. Besides, the involvement of people’s groups in its drafting and the transparency provisions in it earned the NREGA this tag.

For over a year now, serious delays in the payment of NREGA wages have been recorded across the country. Apart from violating the law (the Act stipulates that wages be paid within 15 days of work being done), delays cause great hardship to NREGA labourers. When wages are delayed, they are forced to resort to lower-paid or exploitative employment, and even distress migration. The delays have diminished the interest of labourers in employment provided under the Act.

Yes, I mean that seriously. Guaranteed employment schemes (and compensation if no employment can be found) are designed to cushion the shock of poverty and provide a bottom, though this one is available only in rural India. I will never be a beneficiary, but I am comforted by it as a citizen who sees that this is good for a lot of other eligible citizens (going by their words and votes).

Both articles point out real implementation problems in many states (not all), but do you not think NREGA qualifies as a safety net?

"456 million living below international poverty line" means 456 million in distress, right? and their safety net is -dig ditches for rs 110-? that is 7 hours of hard physical labor with half hour lunch breaks, with no benefits, no insurance. that is some creative thinking for distress solution! no, i don't think it is a safety net, it revolts me to expect people in distress to break their bones to remain alive. these are tax paying citizens like you and me.

I've heard many complaints about NREGA, but the rural poor resenting the work is not one of them. Can you provide any empirical data that shows the rural poor unhappy with the labor itself? My sense is that a lot of the rural poor have always done hard manual labor, and while you and I can be revolted all we want, a lot of them do want the NREGA work. Without NREGA, they might fall deeper through the cracks, be exploited at lower wages, and be closer to debt, chronic hunger, and worse.

The idea of a safety net is relative. Unlike other rural jobs, NREGA jobs do offer some disability/death insurance. Besides guaranteeing employment for 100 days a year (or an allowance), it has also set higher and gender-neutral minimum wages, and mandates safer labor practices, day care provisions, and on-site first aid (these last two surprised me!). At least as conceived, its legal provisions allow people greater dignity, and it grants them a stake in developing their own local infrastructure.

It is good to push for additional safety nets (as folks once did in today's developed nations) but I wonder what mileage we stand to gain by not recognizing NREGA as a classic Keynesian safety net (with aspects of a rural development / poverty reduction program).

Fine, let's say NREGA isn't a safety net. How would you design a real safety net for the over 300 million poor citizens in rural India?

namit, i was asking about why *you* think it is a safety net. not whether the poor liked the concept or not. they have been given little choice in this matter. as a person free to see it objectively, being in a position to compare developed and other developing countries approach to economic safety nets, i wondered what exactly makes you think this about nrega. i get the picture from the above answer.

"How would you design a real safety net for the over 300 million poor citizens in rural India?"

i would find myself a robinhood, who'd steal from the rich indians and give it to the poor, for free. :)

namit, for us to begin having the same idea about the key elements (poor, citizens, safety nets) in that question would take a while, before any design that seems reasonable to me, sounds reasonable to you.

Anu, I don't know about you, but on the "key elements", one Indian I tend to take seriously is Ambedkar. :-) He was no doubt both trenchant and idealistic, but his much greater virtue was that he didn't stop there. He also focused on smart, pragmatic, and sustainable solutions, and relied more often on the force of his arguments than on rhetorical flourishes.

Speaking of citizens, Ambedkar, and democracy in India, I finished a new article on these and other topics a week ago. It will appear here tomorrow night (and on 3QD). I'd be curious to hear what you think of it.

namit, that you think nrega is a crucible towards smart, pragmatic and sustainable solutions, leaves me no scope but to leave the topic in lame rhetoric... even as the linked article tells you the story of its failure "the number of poor, which was expected to decline, has increased from 456 to 488 million." i honestly believed you linked to this as you were critically examining it. and had hoped for a productive conversation.

if its massive failure does not lead to questioning of what is wrong in its basic design/thought, even by people who can afford to be objectively distant and diversely informed -and they think that it is a laudable strategy, it has n redeeming qualities and so on, i tend to think there is little to discuss. no hard feelings :) and namit, belonging to the same community as ambedkar does not make one an expert on his thoughts and works, my reading of him like most adult indians has been recent and limited. will look forward to your new article.

Anu,
Both articles I linked to examine NREGA in some detail. They analyze why it hasn't worked as expected, what to do to fix it, and their assessments seem reasonable to me. None of the authors chide NREGA itself as useless, exploitative, or "revolting". That there are several implementation problems does not mean that it is a doomed strategy from the start, or that there is not much worth redeeming in it. I need to learn more about NREGA but right now I think the smart, pragmatic approach would be to try and improve it via a civil society debate, as many are trying to do. In any case, my dig, such as it was, was directed at the "robinhood solution" from you, hardly the launching pad for a productive conversation. :-) No hard feeling either way; most often I value and respect your thought-provoking perspective.

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